Human Resources Committee on Oct. 29th, 2024

[The Chair (Mr. Robert Morrissey (Egmont, Lib.)), Liberal, Bobby Morrissey]

Committee members, we are actually on time this morning. It is 11 o'clock, and the clerk has advised me we have a quorum.

Those members appearing virtually have been sound tested, as well as the witnesses.

With that, I will call this meeting to order.

Welcome to meeting number 132 of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

Today's meeting is taking place in a hybrid format.

All witnesses, as I indicated, have been sound tested and are good to go.

I also want to remind participants to please wait until I recognize you by name before speaking. As well, you have the option to participate in the official language of your choice. In the room, use the interpretation on the headset, and please select the interpretation that you will need before the meeting. For those appearing virtually, to avoid disruptions, choose the official language that you wish to participate in.

In the room, please avoid touching the microphone boom as it can lead to sound disruptions, which are harmful to the interpreters. As well, I would remind all those in the room with devices to please turn any alarms or ringtones off, because, again, they can cause hearing issues for the interpreters.

With that, pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, June 3, 2024, the committee is continuing its study on the advancements in home building technologies.

I would like to welcome our witnesses who are with us this morning. For the first hour, we have Mr. Hans Jain, president, Atria Development Corporation, and Ms. Sabrina Fiorellino, chief executive officer, Fero International. In the room, we have Mr. Ian Arthur, president and chief executive officer, PrinterBuilder Consulting.

We will begin with Mr. Jain.

You have five minutes. I will remind you when your five minutes are gone to wrap up shortly afterwards.

Mr. Jain, you have five minutes for your opening statement.

[Hans Jain, President, Atria Development Corporation]

Thank you very much for the opportunity to appear in front of you, honourable members of the House of Commons subcommittee.

I am Hans Jain, president of Atria Development Corporation. My family has been in the building development and property management business for over 45 years. We're focused on building traditionally multi-family residential buildings.

We are a fully vertically integrated firm from land acquisition, planning, design and construction to property management and asset management. Our building design process is fairly vigorous. We look for structural efficiency, design efficiency, efficient floor plates and unit sizes, making the overall project more economical, but also allowing for better-designed units that feel better for the people who live in them, who call their apartments home.

We also try to capture cost savings both during the construction process and later on in the building operations, in how we run our building systems. As we're long-term holders of the asset, we're very focused on the quality of what we build and the efficiency long term.

As a company, we're also committed to advanced technologies to meet the challenges that we face transitioning into a low-carbon economy, by building more energy-efficient buildings, reducing the environmental impacts of our construction and creating healthy and accessible environments for residents. Atria has received the Rick Hansen Foundation gold standard award for accessibility across our building stock.

Atria was the first developer in Ontario to incorporate electrochromic glass in our windows. The glass will tint, depending on the amount of sunlight, reducing heat gain and glare, and eliminating the need for blinds. It reduces cooling loads up to 20%. This product is both energy efficient and also provides a better living experience. This was a substantial expense. Each piece of glass has both Internet and power. It can also be controlled by the tenant living in the apartment. This is something that we like to invest in.

Building on this experience, Atria is incorporating geothermal power for both heating and cooling in all our buildings, paired with a high efficiency Mitsubishi variable refrigerant flow HVAC system. It's called VRF.

Currently, we're building two towers in Scarborough Town Centre called the Town Centre Place. This will be the largest geothermal field in Ontario. We've completed that. There will be two towers of 30 and 40 storeys. This continues with everything from our appliances, the plumbing fixtures....

We also use SmartONE technology, which allows residents to control features such as temperature, lighting and security from their mobile app. Again, it's providing efficiency, and the technology also provides comfort and control with the individual homeowner.

We're also exploring ways to further reduce our carbon footprint in our building operations and also material use. We are in the process of doing one of the largest mass timber rental buildings located in Oshawa, Ontario. We'll be purchasing that mass building structure from Element5 located in St. Thomas, Ontario. The exterior panels will be state of the art, and they'll be manufactured off-site by UnitiWall, which is the latest technology for exterior wall panels. We think that's where there will be adaptive reuse of our project, but we're also adding nine storeys of mass timber structure.

For context, originally we had designed the structure in concrete and steel—traditionally—but given that the weight of concrete and steel is heavy, we could only get six storeys. With mass timber, which is lighter, we were able to move to nine storeys and add an additional 70 to 80 units to the project. It also will speed up the process and the timelines. I think that manufactured solutions with technology is something that needs to be focused on and adapted.

Just to let you know, with the strategy of adaptive reuse, where we take old buildings, we converted an 1896 YMCA into 136 rental units, and we completed another building from 1879 in Peterborough also. We have a practice where we take old buildings and convert them into residential units. We think that's another aspect of moving development along.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Jain. We've gone over the five minutes. You can continue with the points you want to raise in answers to questions, which I'm sure you will get.

We'll now move to Ms. Fiorellino.

[Sabrina Fiorellino, Chief Executive Officer, Fero International]

Thank you.

I would like to start by thanking this committee for giving me the opportunity to speak. It is an honour and a privilege for me to be here, and I commend the hard work you're collectively doing.

My name is Sabrina Fiorellino. I'm the CEO of Fero International Inc., a volumetric modular building company located in Stoney Creek, Ontario.

Fero operates a 300,000-square-foot manufacturing facility, the largest modular manufacturing plant under one roof in Canada. Fero delivers state-of-the-art volumetric modular infrastructure to the health care, educational, residential, industrial and commercial sectors. Europe and Asia have been using modular construction for over 50 years, and this technology has up to 80% market penetration in some countries. It is often under 3% across North America.

To build the modular industry in Canada, we need to begin by addressing three topics: procurement barriers, public perception barriers and speed barriers.

I'll start with procurement. Existing procurement practices are the single biggest barrier to the success of the industry. In Europe, at the inception of the modular industry, the government was the first to adapt the groundbreaking technology through the procurement of modular projects. The European modular sector is now booming, and the private sector has widely adopted its use. In Canada, there are very few modular construction projects procured by governments.

I was recently at a housing conference where a government official referenced the EV sector. They said that all levels of government work collaboratively to financially support the EV sector, because “Who would come here and spend tens of millions of dollars to build a factory with no support and no guarantee of orders?” Well, that's exactly what the modular industry has done. Our industry needs government to be more innovative in procurement so Canadian modular projects can answer current infrastructure challenges, such as housing. Doing so will greatly improve the timelines required to emerge from the crisis we currently face.

We recommend a modular-by-default procurement approach. Using this approach will send a signal to the market that governments are serious about seeing innovation and change. By creating a large pipeline of projects is created in all sectors, the housing sector will benefit in the long run and economies of scale for affordable housing will emerge.

In addition to modular-by-default, progressive procurement models that account for deposits, appropriate payment milestones, factory acceptance testing and more need to be considered. We believe these progressive procurement models make standardization of design less important, because they allow modular builders to be involved in the design process from the beginning. There are many architects and engineers who have over 30 years of experience. They are willing to work with those who are newer to the industry.

The need for industry support leads me to my next point: public perception. In Canada, there's a negative public perception that modular construction is inferior to traditional construction, a perception that does not exist in Europe or Asia. To educate the public, we believe governments need to send clear messages to Canadians regarding the benefits of modular, including speed, cost certainty, quality, sustainability and safety. One way to do this is governments being the initial adopters of the technology. This will have a domino effect. As more successful projects are delivered, more adoptions will occur in the marketplace, and secondary support industries will evolve in, for example, finance, insurance and surety. Additionally, Canada's modular construction industry should be considered an integral part of the mandates of economic development, job creation and trade across the country, in order to advance economic growth and innovation.

This brings me to my last point: speed. Speed is required to get us out of our current crisis. Modular can answer that call, but not alone. With productivity in the global construction industry declining as much as 8%, speed is even more critical. One of the biggest advantages of modular construction is speed, which inherently reduces costs, especially financing costs, in today's environment. With delays occurring outside of the control of modular manufacturers, the benefits of speed can be lost. These delays increase costs, which are ultimately passed on to the customer and in turn make housing unaffordable. In an environment where costs are already high, in part due to development charges and other fees, the need to keep costs down and maintain speed is critical.

One example of where speed has deteriorated is in codes and regulations. In Europe, where some manufacturers can produce a module every 37 minutes, the building codes are, for the most part, uniform. Canada has varying building codes federally and provincially, as well as additional conditions imposed by municipalities. As improvements are made to create greater consistency, we also need to determine how these standards are applied uniformly by inspection agencies. Other barriers to speed include zoning bylaw amendments, site plan approvals and building permits. These often take three years or more to obtain, and landowners incur additional carrying costs on lands. Overall red tape and complex legislation, such as transportation legislation, make it difficult to achieve any efficiencies in modular building.

It is only when modular is used to its full potential that we can take true advantage of this new technology, including AI and automation, and we realize all the benefits that modular construction can provide to create greater affordability.

Thank you.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Fiorellino.

I will now move to Mr. Arthur for five minutes.

[Ian Arthur, President and Chief Executive Officer, PrinterBuilder Consulting]

Good morning, everyone, and thank you for having me. I'd like to thank the committee for allowing me to appear and speak on the advancements in home building technologies.

My name is Ian Arthur, and I am the founder of nidus3D and PrinterBuilder Consulting. I oversaw the construction of Canada's first 3-D printed homes, as well as the first two- and three-storey printed structures in North America.

Our buildings are strong, resilient and beautiful, and built to net-zero ready standards. Our goal is to transform the build process and in doing so, dramatically increase the speed of delivery of affordable, beautiful homes. Using a first principles approach, we are stripping away unnecessary complexity and rethinking every aspect of the process of how we build homes.

This is because, while we need to look at every avenue possible to increase supply, at the heart of our housing crisis is a process issue. We will not be able to subsidize our way out of this crisis. We build homes with hundreds of materials, thousands of components and tens of thousands of process steps. Each step is performed by dozens of different labourers working for many different companies. Each part of this drives up costs, timelines and inefficiencies. The structure of the sector is fragmented and, by this very nature, conservative and resistant to change. It prevents a whole-of-building approach and resists the introduction of new methods and technologies. As a result, it is one of the least technologically disrupted sectors on the planet.

We are, though, beginning to have an opportunity to change this if we move decisively. Global demand for housing is spurring innovations that have the potential to meaningfully increase the supply of housing with rapid, repeatable processes. By using advanced automation and 3-D printing, we can cut through the complexity issues, reducing material requirements, labour costs and, most importantly, process steps.

I'm starting with 3-D printing, although honestly, I'm technology agnostic. I would use any tool that allows me to advance the speed and quality of home delivery. 3-D printing, though, is the first technology I've found that fundamentally begins to address this process complexity issue, and we must act soon. Canada is already behind in the development and implementation of new building technologies. We are lagging behind the U.S., Europe and Asia, and it gets worse every single day. We are slow to look at disruptive technologies, and we tend to have a wait-and-see attitude until it's proven elsewhere before attempting it here.

There is a near infinite amount of support for small-scale pilots in Canada. We love them. They're great headlines. They're fairly easy to pull off. What we are missing to meaningfully move the needle on housing supply is helping companies scale production to the level that will actually increase the supply of housing in Canada.

Exacerbating this issue is the political desire for solutions that fit into election cycles. The crisis is incredibly complex and has millions of moving parts. What we need from the government is consistent policy that extends from mandate to mandate and from party to party, and allows us to bring in new technologies that are complex, expensive and hard to deliver initially, although they have a huge amount of promise in the long run.

An example of this is a near singular focus on modular. While I believe it has a role to play in the future of housing, we need to not put all our eggs in one basket. We need to apply “best fit” technologies where they're best used. I think 3-D printing, modular and other forms of robotic, automated construction are all part of that solution.

I will briefly address two of the common points of resistance that are often brought forward when automation and 3-D printing are brought up, particularly in the realm of housing.

One is the potential loss of jobs commonly associated with automation. While automation construction will disrupt the sector, it will continue to grow as a key employment industry. The scarcity of skilled labour and the demand for housing underpin the need to aggressively recruit into this sector. The tools may change—we used to dig holes with shovels, and now we use excavators—and a 3-D printer is, honestly, just a bigger tool. It still needs incredibly smart, skilled operators to run it. I believe the jobs will change, and I believe the introduction of new building technologies is actually a wonderful opportunity to recruit new people into the skilled trades and convince a new generation of youth that this is a fantastic career path they can pursue.

The other point of resistance I will briefly address while I have time is this. Because I use concrete as my building material of choice—the embodied carbon of the material itself—I would urge the members to understand the need to separate the technology from the product that is actually being extruded.

We need to decarbonize the concrete sector. It's one of the worst polluters on the planet, and there are incredibly smart people working on this. I am working with companies from across Canada and around the world to deliver materials that are significantly lower in terms of embodied carbon, and there is a path to carbon neutrality. The process, though, of using 3-D printing to construct housing should and can be agnostic of the material that goes into it.

With that, I'll conclude my remarks, and I look forward to questions from the committee. Thank you very much.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Arthur.

We will begin with Mr. Aitchison for six minutes.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thank you, Mr. Chair.

Thank you to all the witnesses.

That was great stuff and very interesting. We've heard a lot about the amazing new technologies. We've heard about 3-D printing. We've heard a lot about modular housing. I've had the opportunity myself to visit some of these factories, and they're amazing.

I'd like to start with Fero International, and Ms. Fiorellino. You spoke about the biggest delays. I couldn't agree more with you that we need to ramp up and scale up the development, which could really increase production in your facility, I'm sure. You specifically mentioned codes, regulations, zoning bylaws and the development approvals process.

I'm wondering if you could speak a bit more to the cost of the delays. You could build a lot more homes, but you don't have a place to put them. That's a big issue. How much could you reduce the cost of every unit, for example, if the development approvals process, which includes huge fees like development charges, was reduced? What are those costs? What's the impact on the cost of every unit?

[Sabrina Fiorellino]

If you take our square footage cost and then add development charges, fees and the cost of land, etc., our costs end up ultimately being less than a third of the overall cost. The longer the process draws out, the more the rest of the ancillary fees accumulate, and then it also slows down production in our plant.

I can give you an example, and we're probably not proud of this, but we built an outpatient clinic in western Canada. We finished the entire building at the request of the health authorities, and it sat in our plant with no building permit for months. Ultimately, the building permit issue got resolved. The building was delivered in five days, craned off the trucks in one day and operational very soon after that.

Delays naturally add costs and customers' incurring additional storage fees and additional fees for the general contractor who's waiting, and they're asking for standby fees. You can see how costs balloon in every instance, whether it's housing or health care or other infrastructure, when things slow down at the permitting level.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thank you for that.

Further to that, then, when you mentioned the code and regulations, I'm sure you're referring to the national building code and its implications for provincial codes. Is there any evidence that indicates that the national building code takes affordability into consideration?

[Sabrina Fiorellino]

It's probably not my area of expertise, but I think the streamlining of codes can assist with affordability. There is a lot of work being done, and I commend the work to make some of the codes more uniform from federal to provincial to municipal jurisdictions. What we are seeing, though, is that, when code changes occur, the bodies at the municipalities—the inspectors or the approving bodies at the municipalities—don't know how to implement the code changes. The issue is that the changes to make the codes more uniform are slowing down the process, because then they're not being implemented quickly enough. I think that needs to be considered when we're looking at codes overall.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Time is money, right?

[Sabrina Fiorellino]

Absolutely.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Okay, thanks for that.

Mr. Arthur, I'd like to move to you. You stated that we cannot subsidize our way out of what is effectively a process issue. I'm going to give you a minute to elaborate on that and what the issue with process is. I think the technology you're talking about is amazing. What's the issue with process, and what are the cost implications?

[Ian Arthur]

You have an incredibly complex process that is very hard to sequence and dozens upon dozens, like I said, of different types of labourers working for different companies who all have to show up on site. Anyone who's in the development industry knows the difficulties associated when one sub-trade doesn't show up for a day—they're a day late or they're behind on another job—and the ripple effects this has.

This translates as well to your previous question about municipal inspections and the role of the building code. If there's a delay in a building code inspector arriving on site, your site's effectively shut down until they arrive. That's not a particular knock against any individual inspector—they work very hard—but there is absolutely a need to standardize these processes in a way that we can have certainty on the quality of product we need to build to the highest standards and there aren't the slowdowns that are associated with that sequencing issue.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

So there is a cost related to the thickening of the process over the course of years. Is that what you're saying?

[Ian Arthur]

Extremely so, and in terms of not being able to subsidize our way out of this, it's just too big. Add up the total cost of the number of homes, and even if we cut the cost of production to a quarter of what it is right now, there isn't enough money in this country to build them.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

On top of the process issues and the delays that are caused by local government and the code issues, governments make a lot of money on housing too. I think you probably understand that better than most because you're in the business. Do you think that limiting the GST, for example, on the cost of homes is a smart move? Should we get government costs down on homes?

[Ian Arthur]

I'll say that's probably not my area of expertise, the effective sort of tax reductions that could stimulate housing production. Whether it's end use for consumers and reductions in property tax or GST, we have to pull every possible lever we can, and we can't—

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

You just named a lot of taxes there.

[Ian Arthur]

I know I did.

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

So reducing those wouldn't be a bad idea.

[Ian Arthur]

Anything we can do to make housing more affordable....

[Scott Aitchison, Conservative, Parry Sound—Muskoka, ON]

Thanks very much.

[The Chair, Liberal, Bobby Morrissey]

Mr. Coteau, you have the floor for six minutes.